Seeking to cut down on a thicket of legal challenges and negative publicity, Oregon regulators moved quickly Monday to start the formal public review of tax filing reports from the four major investor-owned energy utilities it regulates. The filings appear to be a mixed bag of under- and over-collections.
The three-member Oregon Public Utility Commission (PUC) received accountings indicating Portland General Electric (PGE) and Spokane, WA-based Avista Utilities may have to refund monies to customers to cover over-collections for estimated taxes this year. The other utilities, PacifiCorp and Northwest Natural Gas Co., may need to collect more from customers to cover their tax burdens for the year.
Noting that the PUC has 180 days to review the utility filings, Chairman Lee Beyer said the regulator’s job is “to make sure the filings are accurate and that customers are treated fairly.” Depending on the outcome of the review, customers will see either a rate credit or rate surcharges, effective June 1 next year, Beyer said.
A state law passed two years ago (SB 408) was designed to ensure that the amount collected for taxes in customer retail rates matches the amounts paid by the utilities to various federal, state and local taxing authorities.
The PUC filing showed PGE customers may receive up to $37 million in refunds for over-collections, and Avista may give back $1.1 million related to the rates it charged for estimated taxes paid on its natural gas distribution operations in Oregon. In contrast, PacifiCorp customers may have to pay an additional $38 million to cover taxes paid by the utility, and Northwest Natural customers may pay an additional $1.694 million.
Earlier this month, PacifiCorp said it was refunding another $2.2 million to cover overcollection of an Oregon county’s business income tax between 1999 and 2005. The money was collected from ratepayers but never paid to the government. About 72,000 customers in Multnomah County are eligible to receive refunds averaging about $2.50.
That action — separate from the PUC filings — comes as a result of a settlement PacifiCorp reached with a local utility tax reform group headed by consumer advocate Dan Meek. The 2005 passage of SB 408 was supposed to take care of the issue of utilities truing up the amounts of taxes paid with monies collected in rates, but ensuing challenges by both utilities and Meek’s Utility Reform Project (URP) have continued to stir up the issue.
The PUC said the legislature passed SB 408 out of “frustrations arising from Enron Corp.’s ownership of PGE” at the time, resulting in the regulators setting rates based on the assumption that the utility would pay taxes to units of government. However, in actuality, Enron’s losses in other lines of business offsetting its overall tax liability meant that almost none of the assumed taxes collected from PGE customers were ever paid to local taxing authorities by Enron.
The Oregon utilities must file annual tax reports to determine the difference between the amounts collected in rates to pay taxes and the actual taxes paid. The law only applies to utilities with more than 50,000 customers.
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